Guarantees for untied financial loans form an integral part of the Federal Government’s raw materials strategy. They provide cover for loans from financial institutions based in Germany (and, upon certain conditions, also from foreign banks) for raw materials projects, protecting against the risk of default on repayments for commercial or political reasons. By doing so, they make an important contribution to ensuring that the Federal Republic of Germany is supplied with the raw materials that it needs. Untied financial loans are not tied to German supplies or services, but are rather project-based.

Projects are deemed worthy of funding if they are economically viable and serve the interests of the Federal Republic of Germany in a special way or make a contribution to the economic development of the recipient country. This notably applies to projects that involve supply contracts ensuring the Federal Republic of Germany’s supply of mineral and energy resources required by its business sector. In addition to being worthy of funding, the project must also be acceptable in terms of the risks assumed by the federation if it issues the guarantee for the untied financial loan.

Euler Hermes AG has been commissioned by the Federal Government to implement the untied financial loan guarantees scheme. The decision as whether a guarantee for an untied loan can be issued is taken by the Interministerial Committee for Untied Financial Loans.

Demand for raw materials required for forward-looking and key-enabling technologies such as electric mobility and renewable energies remains at a high level. Securing sufficient quantities of raw materials under long-term purchase agreements continues to be important for companies. This applies to metals such as rare earths, cobalt and lithium as well as for traditional industrial commodities such as copper.

In 2020, the scope of applications for guarantees for untied financial loans was expanded to include corporate financing. Unlike with a traditional untied financial loan, a corporate untied financial loan guarantee can be issued without this being tied to a particular investment project. The requirement for a long-term purchase agreement serving to secure the raw materials’ supply of German purchasers, however, remains.

In 2022, the Federal Government declared nine projects in the raw materials sector worthy of funding. The federation also issued three guarantees. Over the past five years, the federation deemed a total of 26 projects in 15 countries across the globe and involving 9 different raw materials worthy of funding. The highest total amount insured, composed of the guarantees issued in earlier years and still at risk amounted to €8.7 billion at the end of 2022 (including interest coverage), divided up into twelve guarantees. Of this, €7.2 billion was issued for raw materials projects (nine guarantees) and €1.5 billion for transition projects (two guarantees).